Crypto conglomerate DCG to close Stamford-based business

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STAMFORD Struggling cryptocurrency conglomerate Digital Currency Group is closing one of its Stamford-based subsidiaries, while another of its businesses has filed for bankruptcy and faces federal pressure that reflects widespread disruption to its industry .

In a letter to shareholders last week, DCG founder and CEO Barry Silbert said the company had made the difficult decision to close HQ, the wealth management business DCG founded in 2020. Employing around 30 people, most of whom are based in Stamford, HQ is expected to be disbanded by the end of this month.

While we still believe in the headquarters concept and its outstanding management team, the current downturn is not conducive to the near-term sustainability of this business, Silbert said.

The headquarters closure follows the opening last year of DCG’s headquarters at 290 Harbor Drive in the Shippan Landing complex, after the company moved from Manhattan. DCG still has its operations there, along with those of two other subsidiaries, digital currency asset manager Grayscale Investments and institutional trading platform TradeBlock.

DCG officials were unable to immediately provide a current count of their Stamford offices. In November, following earlier layoffs, the company said it had 58 Stamford-based employees, not including subsidiary staff.

The company had a much brighter outlook when it announced its arrival in Connecticut in November 2021 with a press conference at 290 Harbor Drive attended by elected officials including Governor Ned Lamont, Senator Richard Blumenthal and Rep. Jim Himes. If it creates and maintains more than 300 full-time jobs, DCG would earn a state Department of Economic and Community Development grant of up to about $5 million. If it creates fewer jobs, it would receive fewer subsidies.

There was no talk of renegotiating or in any way modifying this agreement, said Alexandra Daum, commissioner-designate of the DECD, in an interview. We wish them luck as they navigate the current industry tumult.

No financing has been paid to date to the DCG, which has not yet finalized the signature of its contract with the DECD. Company officials said DCG is still on track with its documents.

We have done so in good faith, submitting signed documents as recently as the summer of 2022, DCG spokeswoman Amanda Cowie said in a statement. We have a signed LOI (letter of intent) and financial plan with DECD, and a good working relationship with our business partners there.

DCG subsidiary files for bankruptcy and faces federal charges

Other DCG businesses are also under pressure, including Genesis, the Manhattan-based crypto lender, which filed for bankruptcy on Thursday.

Genesis had been in shock for some time, temporarily suspending withdrawals and lending in November following the collapse of crypto exchange FTX. Earlier this month, it laid off 30% of its staff, according to the Wall Street Journal.

The firm is also in the crosshairs of federal regulators. Last week, the Securities and Exchange Commission charged Genesis and crypto exchange Gemini for what it said was the unregistered offering and selling of securities through the Gemini Earn crypto asset lending program.

Launched about two years ago, Gemini Earn allowed investors to lend their crypto assets to Genesis in exchange for Genesis promising to pay interest. In November, Genesis announced that it would not allow Gemini Earn investors to withdraw their assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market, the SEC said in a statement. A press release. At that time, Genesis held approximately $900 million in assets from 340,000 Gemini Earn investors, the SEC said. Gemini terminated Gemini Earn earlier this month, but investors have still been unable to withdraw their assets, according to the SEC.

We allege that Genesis and Gemini offered unregistered securities to the public, circumventing disclosure requirements designed to protect investors, SEC Chairman Gary Gensler said in a statement to the press release. Today’s charges build on prior actions to make it clear to the market and the investing public that crypto lending platforms and other intermediaries must comply with our time-tested securities laws. This best protects investors. It promotes confidence in the markets. It is not optional. It’s the law.

Prior to the announcement of the charges against the SEC, Gemini co-founder Cameron Winklevoss blamed Silbert for Genesis’ recent struggles.

There is no way forward as long as Barry Silbert remains CEO of DCG, Greenwich-born Winklevoss said in an open letter last week to the DCG board. He proved unfit to lead DCG and reluctant and unable to find a solution with creditors that was both fair and reasonable.

DCG responded in a message sent from his Twitter account, saying: This is another desperate and unconstructive publicity stunt by @cameron to deflect blame from himself and Gemini, who are solely responsible for operating Gemini. Earn and marketing the program to its customers.

Along with his twin brother and Gemini co-founder Tyler Winklevoss, Cameron Winklevoss was also embroiled in a now-settled legal battle with Facebook co-founder Mark Zuckerberg. The argument between the Winklevoss brothers and Zuckerberg was chronicled in the 2010 film, The Social Network.

[email protected]; twitter: @paulschott

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